Attorney General Baker Recovers $789,000 From Kentucky-based Company Accused of Medicaid Fraud

November 14, 2006

Georgia will receive $789,000 as part of a 43-state, $49.5-million settlement with Covington, Ky.-based Omnicare Inc., according to Attorney General Thurbert Baker.

This is a significant recovery for our Medicaid program, Attorney General Baker said. As a result of this settlement, Omnicare is paying damages equal to double the amount the state expended. The agreement with Omnicare, an institutional pharmacy that does business in 47 states, resolves allegations that the company violated various state and federal statutes and regulations by switching dosage strengths and forms of certain medications used by Medicaid patients.

From 2000 through 2005, Omnicare, using a therapeutic interchange program, aggressively switched patients from brand-name drugs to generic drugs, and also switched various forms and strengths of drugs. One purpose of the therapeutic interchange program allegedly was to lower costs for third-party payers, including Medicaid. Unfortunately, as a result of some of these switches, the Medicaid programs of the various states actually paid more for certain drugs. Specifically, Omnicare made the following moves, which resulted in increased payments by Medicaid programs in 43 states:

Omnicare made these switches without the involvement of the patients physicians and, in doing so, violated many states pharmaceutical dispensing statutes and regulations or Medicaid's definitions of medical necessity.

As part of the settlement, Omnicare will enter a Corporate Integrity Agreement with the United States Department of Health and Human Services Inspector General. The agreement will include provisions that Omnicare cannot switch dosage or strength forms of any medication if the result would be an increase in cost to third-party payers, including Medicaid.

The National Association of Medicaid Fraud Control Units conducted the settlement negotiations on behalf of the states..